Another class action suit has been filed in the US against Arbitron by some of its investors. The suit alleges that the company’s officers and directors issued misleading statements regarding the rollout of its Portable People Meter last year.
This is the third institutional investment firm to file a class action suit against arbitron. According to a court report explaining the law suit, the complaint charges Arbitron and certain of its officers and directors with violations of the Securities Exchange Act of 1934.
The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements that misrepresented and failed to disclose:
(i) that the Company’s scheduled implementation of its Portable People Meter ratings service in certain major markets was not performing according to internal expectations and the Company was experiencing significant difficulties such that it would have to delay its implementation; and
(ii) as a result, defendants lacked a reasonable basis for their positive statements about the timing of the implementation of Arbitron’s Portable People Meter ratings service and the Company’s prospects and future earnings.
On November 26, 2007, Arbitron announced that it would delay the commercialization of its Portable People Meter radio ratings service in nine markets and that the Company would be revising its financial guidance for 2007 and its outlook for 2008. In response to this announcement, the price of Arbitron common stock declined $7.21 per share, or over 14.74%, to close at $41.70 per share, on unusually high trading volume.
Arbitron will defend the action.
Announcing its 2008 company results recently, President Stephen Morris did not comment on the suit, but did explain the latest on its people meters:
“Arbitron made solid progress in the first quarter toward our financial goals for 2008… Five months have passed since we announced a pause in the commercialization of the PPM service to address issues raised by our customers, the Media Rating Council and other constituencies.
“Throughout the first quarter, we worked hard to improve the important measures that our clients have told us are crucial to their confidence in the PPM ratings currency.
“I am encouraged by the results of our efforts… I am also encouraged by the public expressions of confidence we have been seeing from radio executives about the value of the PPM service for programming and sales.”